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Labour asks finance ministry to hike EPF rate to 8.8%

Even as a distinction of opinion persists between the finance and labour ministries over the hobby price at the personnel’ provident fund (EPF), the latter is planning to method the previous to revise it. The finance ministry maintains that it…

Even as a distinction of opinion persists between the finance and labour ministries over the hobby price at the personnel’ provident fund (EPF), the latter is planning to method the previous to revise it.

The finance ministry maintains that it has only “advised” the labour ministry approximately a lower interest price of eight.7 per cent, at the same time as the Bandaru Dattatreya-led labour ministry says it became a “directive”.

“Because the notification has not come, we’ll visit the finance ministry with a request to comply with the EPF board’s decision to offer eight.eight per cent hobby for 2015-sixteen,” said a labour ministry official.
The hobby fee of 8.7 per cent would enable EPFO to earn Rs one hundred ninety crore greater surplus compared with what it might have had the hobby rate been eight.8 per cent for 2015-16, according to estimates with the aid of EPFO. However, the finance ministry estimates are but exceptional, according to which the excess would be Rs 326 more if hobby rates are lower at 8.7 per cent compared to 8.8 per cent.

Moreover, those are collected surplus, said the finance ministry, adding even lower interest price of eight.7 per cent would devour into the excess of 2014-15.

The critical Board of Trustees (CBT) of EPFO had encouraged 8.8 per cent hobby rate. But, Labour Minister Dattatreya, in a written respond to the Lok Sabha on Monday had said that the finance ministry ratified an interest charge of 8.7 per cent.

A finance ministry source said on Wednesday that the ministry usually advises at the costs and this time too, it followed the exercise.

In view that small financial savings fees were reduced, the finance ministry cautioned lower interest fee, he stated. The ministry had cut small financial savings charge for the first quarter of 2016-17; as an example, public provident fund would fetch eight.1 per cent interest rate now compared to 8.8 per cent earlier.

The finance ministry supply stated the ministry’s recommendation became primarily based on math. He said that the EPFO went by using the finance ministry’s suggestion and agreed for 8.7 per cent hobby fee. But, whilst it faced flak from trade unions, it blamed the finance ministry.

But, a labour ministry legitimate stated the finance ministry continually ratifies the quotes advocated by means of the CBT of EPFO. They do it on the bigger concern of the financial consolidation.

Trade unions are unhappy with the decision of the finance ministry, and accused the ministry of disrespecting the CBT — the splendid selection-making frame of the EPFO. Relevant trade unions have given a call for a day-lengthy national protest on Friday towards the finance ministry’s decision.
Labour asks finance ministry to hike EPF rate to 8.8%
According to regulations, after the interest charge is approved by the CBT, it has to be approved with the aid of the finance ministry. Labour ministry assets say commonly, the finance ministry vets the price that is taken with the aid of the CBT due to the fact that EPFO distributes interest price according to the earnings generated from its investments every year and does not take money from the authorities.

 

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“That is unprecedented. It has by no means came about earlier than. The labour ministry is in its full right to request the authorities to reconsider this decision. We can take a decision soon in this regard,” stated the labour ministry professional referred to above.

According to economic Audit and funding Committee (FIAC) estimates, the EPFO would be left with a surplus of Rs 673 crores after giving an interest of 8.8 per cent for 2015-sixteen. At eight.7 per cent interest rate, the surplus would be Rs 863 crores. In fact, FIAC, which include representatives of personnel, employers and the authorities, projected that EPFO could earn Rs 34,844 crore in 2015-sixteen, which would be enough to provide a hobby fee of 8.ninety five per cent to the retirement fund body’s 50-million subscribers.

However, the finance ministry envisioned that there was a surplus of Rs 1,604.05 crore for 2014-15. At the proposed charge of 8.eight per cent, this surplus would be decreased to just Rs 673.eighty five crores. “Thus the proposed rate of 8.8 per cent seeks to draw on surplus of closing yr and this would adversely hit renovation of relatively strong returns to traders fo the next year in a falling hobby rate situation,”the finance ministry source stated.

The income of EPFO in 2015-sixteen isn’t enough to pay 8.7 per cent. The ratified interest charge of 8.7 per cent would depart a surplus of around Rs 1,000 crore with EPFO for 2015-16. This is still lower than the surplus of Rs 1,604.05 crore for 2014-15.

The finance ministry source stated the interest earnings earned on ninety million inoperative debts having a foremost of more than Rs 35,500 crore isn’t distributed amongst them but as a substitute distributed amongst existing account holders based on a CBT decision. But, this providence for existing operative accounts will now not be to be had from subsequent 12 months because CBT in its latest meeting has taken a choice to pay interest for the inoperative debts which it stopped because April 1, 2011. “From wherein would those account holders be compensated for beyond years when the hobby earning on their funding has been utilized by existing active account holders?” the finance ministry source asked Graet News Network.

Besides, as on March 31, 2016, around three hundred,000 debts are pending for updation, in the absence of which it’s far tough to calculate the exact liabilities in the direction of them, the finance ministry source stated.

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